FLINT, Mich. — It’s tempting to call the shameful taxpayer subsidy for electric cars — vehicles that are unaffordable for all but a small number of wealthy Americans — this nation’s costly little secret.
But it’s no secret, and that’s the real shame. It’s obvious now that electric vehicles can’t compete with gasoline-powered cars, even with generous government subsidies.
And for years automotive engineers have documented that the performance of electric vehicles — particularly their short range and battery uncertainty under real traffic conditions — falls short in virtually every aspect.
What’s truly shameful is that such disparities have done nothing to change policy. Subsidizing electric vehicles has been a devil’s bargain, making the development of other alternative technologies like conventional hybrids and advanced gasoline engines more difficult.
Since 2008, taxpayers have spent or provided loan guarantees of $6.5 billion for electric vehicles. That includes $2.4 billion for battery and electric drive component manufacturing, $3.1 billion in loan guarantees for electric vehicle projects, and $1 billion in tax credits for the vehicles.
The price that American taxpayers pay for commercializing electric vehicles is painfully evident in the billions spent on green projects that are driven by politics rather than performance.
Instead of letting plug-in vehicles like the Nissan Leaf, GM Volt and Ford Focus Electric compete on their own against fuel-efficient gasoline-powered cars, the government has used subsidies to create an artificial market that otherwise would not exist.
Using taxpayer dollars to favor one automotive technology over another is contrary to the free-market principles that undergird our economy. Simply put, subsidizing electric vehicles doesn’t make economic sense.
That’s evident in the lackluster sales of the vehicles. Even with a $7,500 tax credit, GM sold a meager 7,671 electric-hybrid Volts in 2011, far fewer than its goal of 10,000. Nissan sold 9,674 all-electric Leafs.
We won’t even come close to President Obama’s prediction a few years ago that 1 million electric cars would be on the road by 2015.
The production costs of electric cars have not dropped to make them competitive with gasoline-powered vehicles. The average American can’t afford an electric car, no matter how strongly one might feel about curbing our dependence on foreign oil and driving an emission-free vehicle.
Barring a huge run-up in gasoline prices, it would take more than a decade of driving to offset the Chevrolet Volt’s $41,000 price tag or even the Nissan Leaf’s still hefty window sticker of $33,000.
And the bills can pile up. Unless you’re willing to wait eight hours to recharge your car, you’ll want a high-speed recharger installed in your home, adding thousands of dollars to the cost. Maintaining an electric car is likely to be more expensive than a conventional car, because there are not many repair shops capable of doing the work.
And a battery that costs about $20,000 may last only eight years, leaving customers with a vehicle that has little resale value.
How does the government justify spending taxpayer money to subsidize wealthy Americans buying expensive cars? Most of the all-electric sales have been concentrated in California, where the vehicles are popularized by high-profile celebrities and driven by people who have stratospheric incomes.
Supposedly the price of electric cars will come down as volumes increase, making the vehicles more affordable. But even if the federal tax credit increases from $7,500 to $10,000, as Obama has proposed, and other states mimic California by adding an additional $1,500 tax credit, Americans may not buy electric vehicles because of their shortcomings in size, comfort and range.
The surest way to guarantee a product’s failure is to subsidize it. Over time, cars that succeeded in the marketplace have been those that were developed and commercialized without government involvement.
If a technology isn’t capable of succeeding on its own economic merits, there’s no amount of taxpayer support that will ever make it a commercial success.
• Perry is a professor of economics at the University of Michigan in Flint, and a scholar at the American Enterprise Institute (www.aei.org) in Washington.
Comments (20)
Add commentKnew it after the first sentence
American Enterprise Institute: Forever Big Oil's lapdog.
Gas is close to $4.60 a gallon in Juneau. Any bets when it'll hit $5? $8? An electric car running on cheap hydropower sounds pretty good. And no standing in the rain at a gas station every couple weeks. Range? No worries in Juneau.
An electric 4WD pickup would be my choice instead of a sedan like the Volt.
What did a flat screen TV cost when they first came out? Why would we expect anything different for new car technology?
Good points Lat. I enjoy
Good points Lat. I enjoy that 6.5 billion dollars is the issue? really? That's pocket change for today's politicians, yes yes i'm sure when you add the tax break and what not blah blah, give me a total real number then :)
Side note that might not help my new view on this, almost an $8k tax break for a $30k car? People buying a car that costs that much do not need a tax break. They are the ones that should be paying their full fair share.
What I find dissapointing is
What I find dissapointing is that the US is all in a dither about hybrids, electric cars etc, but Europe has had high efficiency turbo diesels for decades. Why cant we get them?Even the brutish, lavish diesel sedan get as good or better mileage than the Prius. Now lets consider the diesel smart car...
The evil big oil
Our current adminstration has demonized big oil so badly that they are the cause of all the world's evils. Why do we have high gas prices? Its not the cost of crude, we're under $100 per barrel. Yet today, I see in Wash. and Oregon gas prices are going to spike $.35 per gallon. Why? All the restrictions placed on refineries and other gov't meddling we have no gasoline supplies. This is a back door approach to the greenies forcing their will on us. Won't buy their electric cars? We'll get you where it hurts, your wallet. Never mind the economy, people unable to buy enough food, put a roof over their head. Go green no matter what the cost.
@kp
I recently went to Iceland. We had a great car: 60 mpg, steel body, great handling, lots of power, 6-speed and 4 wd. It was a great car. When we got back we looked into getting one, that is how much we loved it.
You can't get them in the States. The maker? Ford. It is baffling...here is a great car, made by an American company that we cannot get here.
If we increase fuel efficiency standards, the fuel efficient cars will come.
double post, sorry!
....
Technology....
First - Banditrider, you don't think record breaking billions of profits for oil companies might also have something to do with the high cost of gas???
What cracks me up about this is what Latitude mentioned - Technology changes, and evolves. Quickly. Just 30-40 years ago the same computer you hold in the palm of your hand and also make phone calls on filled an entire room, and NOBODY could afford one. This is what I think is so odd about anti-green power folks who pretend that the tech used today for wind and solar power, electric cars, etc. will always be exactly the same as it is now. The point is to encourage innovation - it will come. I suspect that anti-green power organizations like big oil have been able to slow the process down by blocking imports of more efficient cars, increases in gas mileage and emission standards, etc.
The truth is that oil won't last forever, and it's dirty to produce. Why on earth wouldn't we explore and develop better and cleaner ways to power things NOW, while we have the luxury of time to transition?
Alaskastu - Have you priced a new car lately? Honda CRV with 4WD starts at around $25,000 - - new Ford pickup at about $23,000 (MSRP - so you know you'll pay more for the 'extras') $30k is a lot, but not egregiously so.
Asia is covered with toyotas
Asia is covered with toyotas that look like the tundra but were diesel. They were awesome! Cant get them here.
Mark J. Perry is known for
Mark J. Perry is known for his other columns on similar topics, such as: "The iPod is a Failure" (2001), "The Cell Phone: Bulky, Expensive, and a Failure" (1983), "Why Build Space Rockets?" (1958), and, my favorite, "Horses vs. Horseless Carriages: Why the Latter Has Already Failed" (1906).
He's also written a book entitled, "Economics: The Story of Short-Sighted Thinking and Pretend Science."
Also, I agree with everyone above about diesels. Diesels rock, and I imagine we could get incredible gas mileage with a diesel hybrid. Unfortunately, Mark J. Perry's article on diesel engines in the U.S., and how their unpopularity proves they will never, ever be a market success, deflates my hopes of ever seeing one here.
SMART CAR
The Smart Car is available in an all electric version. It is more expensive than its counterpart yet they are selling. There is no government subsidies going to fund this manufacturer.
During the 1930s through 1950 more or less there were many electric vehicles manufactured and sold. During the 1960 I worked on many of those on the Boston fish pier. Lots of industrial equipment operates on batteries. Forklifts and other devices for moving around inside builds are the most dominant of the group. All these have some need of recharging the batteries at some time.
I doubt it will be less than a decade before we see an all electric vehicle that will compare to a Corvette when it comes to acceleration and handling. In perspective: it has taken 100 years to evolve the gas and diesel engines, the vehicles and the consumers to accept what replaced the horse or oxen.
NOTE:
I see one poster want you to believe all these regulation came into existence in just the last few years. Perhpas he needs to research the facts as to when all these regulations began and under whose watch they were implemented.
some
thing to ponder, as of 2006 49% of electricity generated in the US was coal followed by nuclear 19%, natural gas 16% & hydro comes in a disappointing 7% so much for clean energy. But hey maybe I can get one of those loan guarantees to work on my world saving prospect. Dehydrated water
They have been developing
Electric cars since 1832 and they still cannot compete without massive subsidies.
"In 1828, Hungarian, Ányos Jedlik invented a small-scale model car powered by an electric motor that he designed. Between 1832 and 1839 (the exact year is uncertain), Robert Anderson of Scotland invented a crude electric-powered carriage. In 1835, another small-scale electric car was designed by Professor Stratingh of Groningen, Holland, and built by his assistant Christopher Becker. In 1835, Thomas Davenport, a blacksmith from Brandon, Vermont, built a small-scale electric car. Davenport was also the inventor of the first of the first American-built DC electric motor."
Islander -
Islander - http://www.teslamotors.com/roadster It will totally compare to a corvette, at least for a couple hundred miles...
The technology has existed
for multiple decades (the seventies) to get well over 50 mpg from full-sized, carbureted, V-8 powered cars. Between big oil and the big three, it is a long ago buried concept.
Interestingly enough El_Boorba, the manufacturer of which I speak, was also Ford.
Greed as usual, rules.
Too much to pay for saving the invironment
The taxes for supporting the electric cars production are really too haevy but useless. Many people apply for payday loans to buy and maintain such vehicle, only the battery for which costs about $20000. If I am in hurry I am not ready to wait for eight hours to recharge the car....
It's a big sacrifice for saving the invironment, fuel is better for me personally...
It's obvious that only Hollywood stars can allow themselves to drive the electric vehicles.
new technologies
I think we should make a way for new technologies to improve our life and to make it more comfortable so I think electric cars is an useful innovation for our society...and if using this is not avaliable for all people some of them can make it real with help of payday loans...it helps for people with limited incomes to improve their lives and to get some better wealths...
Technology for the future
I think it have sense to support such a program, because of many reasons. First of all price difference for electric cars and gas, oil cars will compensated by prices for oil, which grow every year. For second it is first step to saving the environment, which we can do ourselves regardless .. Price is high, but for the goods we always have to pay. And if you need a support in finance you can always apply for payday loans.
This is not an easy task on the face of it. But better start now, to make it easier in future.
People Wake Up
How can someone talk about high price when it comes to saving the environment?! Do you like to breath a dirty air? I don't. Yes, I also see some minuses in electric cars, but it won't take much time to get rid of them. Everything is being improved. I know that the price is a bit too high and average worker can't afford to buy an electric car. My only suggestion is applying for payday loans, this easy and fast program will make it real not only make your life way better but also other's people lives. Be the first to make quality changes in your life.
I completely agree with electric car
We live in such century, when technology is developed every minute. I always keep the idea that people's innovations will destroy our world one day. But I don't want it. A large number of pollutions kill our nature every day. Protection of the environment is needed due to various human activities. The electric car is a step to protect people and nature from damaging. And I think payday loans, it's a ticket for bright future, without poisons.
Is this an advertisement for
Is this an advertisement for payday loans? My god! Never heard that phrase in regular use and then it appears over and over again. If you have to get a payday loan, you are broke and shouldnt be buying a new car.